Performance Bonds are Contract Guarantee Bonds, in which the guarantor undertakes to pay damages to a third party if there is a breach by his contractor. Performance Bonds issued by Surety companies are used to reassure Employers that the contractor will ‘perform’ in accordance with the Contract.
The ability to provide a Performance Bond from a Surety evidences to the beneficiary that the contractor has a strong financial covenant, enabling the contractor to win new contracts.
It is typically for 10% of the Contract Sum, to cover losses incurred by the beneficiary following a breach of contract, including contractor Insolvency, by the contractor.
They are typically required by contractors operating in the following industry sectors:
Whilst no means exhaustive, here are the main items you will need
As a Specialist Surety Services Provider, DRS specialise in the arrangement of Performance Bonds. We have an approved list of investment grade sureties (typically “A-” Standard & Poor’s or higher) to meet the requirements of Bond beneficiaries.